December 19, 2011

Ukraine's drought to limit winter wheat acreage 

Ukrainian winter wheat acreage has decreased by 22% to 12.7 million acres compared with the previous due to the driest autumn in at least 50 years, according to UkrAgroConsult.

Wheat rose on speculation that drought in Ukraine will curb production and soy and corn gained as dry weather may hurt output in South America.

Parts of Argentina and Brazil will have hot weather this weekend, increasing stress to corn and soy, Telvent DTN Inc. said.

"The effects of the dryness on winter wheat emergence have been large with crop prospects materially diminished in the Ukraine," said Nick Higgins, an analyst at Rabobank International in London. "It's too early to be calling a drought in South America. It has been dry and the near-term forecasts do not look promising."

Wheat for March delivery gained 0.8% to US$5.86 a bushel. London time on the CBOT. Futures are set for a 26% loss this year. Milling wheat for March delivery on NYSE Liffe in Paris gained 0.8% to EUR178 (US$232) a tonne. The price is down 30% this year.

Soy for delivery in March gained 0.8% to US$11.2 a bushel in Chicago. Futures are headed for a 20% decline in 2011, the first annual loss in three years. Corn for March delivery was unchanged at $5.8 a bushel. The price has dropped 7.7% this year.